[Thomas Piketty] CAPITAL in the Twenty-First Century

Piketty: CAPITAL in the Twenty-First Century (2013);

  • Title: CAPITAL in the Twenty-First Century
  • Author: Thomas Piketty
  • Published: 2013
  • Publisher: The Belknap Press of Harvard University Press, Cambridge, Massachusetts
  • Translated: Arthur Goldhammer (2014)
  • ISDN-13: 978-0-674-43000-6

Piketty’s “CAPITAL in the Twenty-First Century” aims that there is a scientific approach to determine what (economic) factors cause inequality of wealth. Piketty relies on statistical and historical data to back up his hypothesis.

His main ideas are

  • If the income comes more from capital than labor, the inequality of wealth increases.
  • α = r × β 
    • α: the share of capital income in national income
    • r: the average rate of return on capital
    • β: the capital/income ratio
    • If the ratio of capital/income (β) increases, the inequality of wealth increases.
  • β = s/g
    • s: savings rate
    • g: growth rate
    • The higher the growth rate, the less ratio of capital/income – long term effect

The solution is the Progressive Tax nationally and globally, especially for income from capital.

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